Economic analysis of film tax credits still not done; Senator says Martinez administration breaking law through inaction
State legislators approved a law 18 months ago requiring a review of New Mexico’s rebate program for moviemakers.
Are taxpayer-funded credits to Hollywood producers a means of bringing high-profile productions to the state and creating jobs, or are they a drain on the public treasury?
Sen. Timothy Keller, D-Albuquerque, right, sponsored the bill to pin down an answer. But, Keller said, Gov. Susana Martinez’s administration has failed to implement the law she signed.
Keller said it means taxpayers still do not know if rebates for Hollywood filmmakers are good or bad for the state’s economy.
As for the governor and her executive team, he says they are breaking state law.
“They’re in violation of a state statute. That’s a fact,” Keller said.
He said he realized state resources were thin, but the movie analysis legislators approved could be done for a relatively small price.
Keller, who has an MBA from Harvard, estimated that a competent review of the tax-credits for moviemakers would cost no more than $50,000. He said this would add perhaps one state employee on a temporary basis.
New Mexico rebates up to $50 million a year to moviemakers who film in the state, so the stakes are enormous, he said.
Scott Darnell, Martinez’s press secretary, said he disagreed with the characterization that a study of the film program had not moved forward.
Darnell said the state film office was working with the Department of Finance and Administration “to take the next step of drafting and issuing a request for proposals.”
Tom Clifford, cabinet secretary for finance and administration, gave a different account of the process.
In an interview, Clifford said a lack of resources had stalled the required analysis of whether movies are helping the economy. He said perhaps the state auditor ought to take over the project, as it could be argued it falls under his purview.
The law requiring an economic analysis of movie rebates requires the state Economic Development Department to “collect data to be used in an econometric tool that objectively assesses the effectiveness of the film production tax credit.” The state Film Office is a subdivision of the economic development agency.
Darnell said a related change in state law on movie tax credits accounted for why the economic analysis had not been completed.
In 2011, legislators decided to limit rebates to moviemakers to $50 million a year. Before that, there was no restriction on how much public money could be returned to Hollywood producers who did business in New Mexico.
“We are in the process of conducting the fiscal analysis that is necessary to address the requirements of the legislation, and that fiscal analysis requires an independent, objective study using data obtained from the first full year of the new film program so that we can accurately examine the program’s impact on the economy,” Darnell said.
Keller said the work should have been done already.
“The hemming and hawing is not the way government is supposed to work,” he said.
In the year before the yearly cap was imposed by the Legislature, the state paid a record $102 million in rebates to television producers and filmmakers.
State lawmakers decided to limit the amount because they were afraid the rebates were costing the state more than moviemakers were contributing to the economy.
The program entitles filmmakers to 25 percent rebates on qualified production expenses. In practice, this means a movie or TV company that documents $20 million in production spending in New Mexico can receive $5 million back from the state.
Advocates of the tax credits said the state still wins, because $15 million was spent in New Mexico on crews, equipment, meals, services and hotel rooms.
But numerous legislators have said they believed the jobs created by movie projects were short-term and unworthy of so generous a rebate program.
Rep. James White, R-Albuquerque, once likened the movie industry to a shell game in terms of accounting for the jobs created. He told of remodeling his home and hiring a carpenter, a plumber and a painter for a couple of weeks.
"Did I create three jobs?" asked White, right.
But executives of hotels, dry cleaning stores, car rental companies and other businesses have testified before the Legislature that the movie industry dramatically boosted their bottom line. Filmmakers put people to work, even if the critics were blind to the successes, they said.
Still, the number of jobs the film industry has created has regularly been debated. Do 2,000 or 10,000 people make their living in New Mexico because of moviemaking? Nobody could say for sure.
Keller said that was the reason he sponsored the bill. It will provide a clear answer as to whether the rebates are smart public policy, he said.
Excitement abounds when a movie such as “The Lone Ranger,” with Johnny Depp as Tonto, is made in New Mexico.
But, Keller said, neither the public, legislators nor the governor will know if it actually helped the economy until Martinez’s administration follows the law and completes the economic analysis.